For those extreme posters who keep saying the US government is paying for everything, let me assure you they are not.
My pension income has been reduced significantly because the UK banks I am invested in have slashed dividends due to unprecendented irrecoverable losses on US mortgage backed securities .
It is a fact that European banks have lost more on US mortgage foreclosures so far than US banks.
They have suffered because US rating agencies lied about mortgage debts being triple AA , mortgage brokers lied about borrowers status and because US mortgages are non-recourse. This previous two points we know now, but it was all kept quiet so foreign investors could be cheated by the chain of commission junkies .
The lack of recourse is the real cause of the crisis today. If borrowers know they either 1) make a huge amount of money by borrowing and buying property that rises in value,
or 2) they walk away having made some money from the stuff they bought with Helocs and non-payment periods and what they can carry away, it is a no lose situation which of course encourages hugely excessive borrowing and speculation.
In Europe all mortgages are full recourse.
All US mortgages should be full recourse on the borrower. I thought the US was supposed to be the center of capitalism, rather than highway robbery. Capitalism works best with out dishonesty and with responsibility. Otherwise boom bust develops and some of you you will lose your jobs as a result (this is not limited to a game of winners and losers in houses). Maybe the new president can get the US back towards the straight and narrow.
PS President Bush vetoed a proposal from the States’ Attorney-Generals in the early 2000s to have tight Federal regulation of mortgage brokers due to heavy lobbying from the latter and an ethoise that markets always know best.
